Trade Practices Act 1974 (Cth), ss.52, 75B

Solicitor for the Appellant and Cross-Respondent:

Counsel for the Respondents and Cross-Appellants:

Solicitor for the Respondents and Cross-Appellants:

The orders made on 22 April 1988 be varied by inserting in orders 1 and 2 after the words "first respondent" the words " and the fifth respondent" and by deleting from order 3 the reference to the fifth respondent.

Orders made 2 May 1988 be varied by:

(a) substituting in order 1 for the words "The first respondent is" the

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

Wheeler Grace & Pierucci Pty Ltd ("the appellant") has appealed from that part of a judgment given by a single judge of the Court (French J.) whereby his Honour ordered that there be judgment for the respondents, Colin Frederick Wright and Maureen Margaret Wright, each in the sum of $2,554.05 against the appellant. The judgment reflected a finding by his Honour that the appellant, through its servant or agent, Peter Francis Collins, engaged in conduct in trade or commerce that was misleading or deceptive in contravention of s.52 of the Trade Practices Act 1974 (Cth). Mr and Mrs Wright have cross-appealed from that part of the judgment that held that Mr Collins was not liable to them under s.75B of that Act in respect of the amount of damages awarded to them against the appellant. Mr and Mrs Wright had, also unsuccessfully, sought relief under s.75B of the Trade Practices Act against Glenn John Wheeler, Michael James Grace and Robert Joseph Pierucci, each of whom was at the material time a director of the appellant. There is no appeal from that part of the judgment that denied them such relief.

2. The misleading or deceptive conduct was found by his Honour to have induced Mr and Mrs Wright to purchase on 9 May 1985 10 special units each in a unit trust called "The Carbon Gold Unit Trust". The trustee of the unit trust was a company called Carbon Gold Pty Ltd which was engaged in gold mining activities in the Mt Magnet area of Western Australia. Those activities were centred around a mine known as "Lindsay's Reward". The cost of each special unit was $500 made up of an issue price of 1 cent and a premium of $499.99. The conduct consisted in a statement made by Mr Collins at a meeting held at the premises of the appellant on 8 May 1985 attended by Mr and Mrs Wright and other potential investors in the unit trust. Mr Collins was at that time a senior client adviser employed by the appellant, a company carrying on business as a financial consultant and investment adviser. He was also a director of Carbon Gold Pty Ltd. His Honour found that Mr Collins was speaking at the meeting on behalf of the appellant, which was actively seeking finance for the gold mining activities of Carbon Gold Pty Ltd, and that he told those present at the meeting, and repeated it after the meeting to Mr Wright and his son, that investors in the special units would receive a return of $499.99 per unit by the end of October 1985. The express statement made by Mr Collins was held to have conveyed the implied representations that Mr Collins believed the statement relating to the return of premiums by the end of October 1985 to be a correct prognosis and that he knew of facts which, in an objective sense, would justify his belief. His Honour concluded that, in the circumstances, the statement conveyed that Mr Collins was making it with due care and in the application of his own experience and expertise. His Honour's judgment continues:

"It is important not to allow the represented

date of repayment to assume too much

significance. The real impact of his statement

was that return of the investors' premium

payments was a certainty within the

comparatively short term future.

In my opinion Collins had no warrant to make an

unqualified statement of this kind and no proper

grounds upon which it could be justified. It

may have been his belief that the premium would

be returned as promised, but he had no facts to

justify the certainty with which that assertion

was made. His statement was inconsistent with

the comment made during the board meeting (of

Carbon Gold Pty Ltd) at which he was present on

26 April (1985) that '.... the speculative

nature of the investment should continually be

stressed to Unit Holders and prospective Unit

Holders'. That comment cannot be reconciled

with the existence of facts which would justify

an unqualified promise to repay the premium in

full within the space of a few months. It is

significant that cross-examination of Wright on

this point was largely directed to the

proposition that he must have known that the

statement had to be qualified by reference to

the actual performance of the venture in

producing gold. In the circumstances the

statement was misleading or deceptive as to the

degree of confidence that could be reposed in

relation to the future of Carbon Gold."

3. The significance of what occurred on 8 May 1985 is to be judged in the light of the prior history of the activities of Carbon Gold Pty Ltd and of the appellant in relation thereto. That history is traced in the judgment of the learned trial judge. Its main features are adequately summarised in the judgment to be delivered by Lee J.

4. The trial judge had before him documentary evidence including copies of minutes of meetings of the directors of Carbon Gold Pty Ltd and memoranda and reports which had been available to the directors of that company prior to 8 May 1985. His Honour also had before him the oral evidence adduced on behalf of the respondents. This included the evidence of Raymond Arthur Couche, a consultant chemical and metallurgical engineer who had, at the relevant time, been the chairman of directors of Carbon Gold Pty Ltd, the evidence of Mr Wright and the evidence of Mr Wright's son who had attended the meeting on 8 May 1985 with his father. No oral evidence was adduced on behalf of the appellant or on behalf of Messrs Wheeler, Grace, Pierucci or Collins.

5. On the hearing of the appeal, counsel for the appellant made a detailed examination of the evidence adduced on behalf of the respondents. He did so in support of a submission that the respondents had failed to discharge the onus which rested upon them of proving, on the balance of probabilities, that Mr Collins had no sufficient reason in the sense explained by the authorities (Brown v. Raphael (1958) Ch 636 at pp 641-5, 649; Global Sportsman Pty Ltd v. Mirror Newspapers Pty Ltd [1984] FCA 180; (1984) 2 FCR 82 at p 88; James v. Australia and New Zealand Banking Group Ltd [1986] FCA 41; (1986) 64 ALR 347 at p 372; Bateman v. Slatyer (1987) 71 ALR 553 at p 559) to believe that the premiums paid on the investments would be returned by the end of October 1985. Much emphasis was laid upon the information available to the directors of Carbon Gold Pty Ltd concerning the proven, probable and possible reserves of gold-bearing ore at the Lindsay's Reward mine and the estimated production and yield figures. It was submitted that none of this information had been shown to be incorrect and that it was reasonable, particularly having regard to the evidence given by Mr Couche, for Mr Collins to rely upon it as supporting the assurance which he was found to have given to potential investors, including the respondents. Reliance was also placed on the evidence given by Mr Wright that he made his own calculations based on the figures put to the meeting on 8 May 1985 by speakers other than Mr Collins.

6. Three documents were identified as providing sufficient foundation for the statement which Mr Collins made at the meeting. They were a document headed "Memo to Incoming Directors" dated 12 April 1985 signed by Mr Nigel Guest, a director of Carbon Gold Pty Ltd who was actively engaged in the operations of the company, a document dated 29 April 1985 entitled "Background Information" also signed by Mr Guest and a document dated 6 May 1985 entitled "Circular to Unit Holders" signed by Mr Couche.

7. None of those documents made any express reference to the timing of the return to investors in special units of the premiums paid on those investments. The document dated 12 April 1985 contained the following paragraphs concerning the Lindsay's Reward mine:

"This mine, with a recently discovered southern

pod, has proven and probable reserves of 50,721

tonnes averaging 23.6 gms. per tonne to the 240

metre level, possible reserves of 44,408 tonnes

at 25.6 gms. per tonne and potential reserves

(southern pod, subject to drilling over the next

few days) of 45,000 tonnes again to the 240

metre level only. Of this potential tonnage,

16,000 tonnes could be mined immediately between

the existing 92 metre level and the surface.

Mining and processing costs will be

approximately $150 per tonne.

In summary then we have immediately accessible

ore totalling 4,779 tonnes containing 126,900

gms. worth $1.65m. (at $13 per gram). As the

development work has already been done and paid

for, mining and processing costs will be about

$100 per tonne, leaving a profit of $1.15m."

The first paragraph was repeated in the document dated 29 April 1985. Both documents stated that the mine would be "fully operational" on an upgraded basis, identified in the later document as 1,250 tonnes per month, within a matter of weeks, the earlier document specifying four, and the later two, weeks. Reference was also made to the projected opening in June 1985 of a transportable processing plant, though there is some discrepancy between the documents as to the capacity of the plant.

8. Those two documents lack precision as to when Carbon Gold Pty Ltd would be likely to receive substantial net income from the projected operations. Obviously one could not place much reliance on the statement that 16,000 tonnes could be mined "immediately". That statement seems to mean no more than that the work of extraction could begin as soon as the mine became fully operational but it might be expected to take some time to reach the level of extraction of 1,250 tonnes per month, particularly having regard to the circumstance that up to the end of April 1985 only about 13 ounces of gold had been recovered from the mine.

9. The document dated 6 May 1985 contained the following summary concerning the Lindsay's Reward mine:

"(a) The main shaft is now developed to the

92 metre level - the new hoist and skip

to be installed this week will allow

mining at the rate of 1600 tonnes per

month.

(b) About 2,000 tonnes of open-cut ore is

being mined from the southern pod and

will be stockpiled ready for processing.

(c) Foundations for the plant are being

laid, and the fabricated plant will be

moved from Perth over the next 14 days

with an early June commissioning

scheduled.

(d) Geological work is continuing .... About

10,000 tonnes of up to 4 gm. mullock

will also be used to supplement the rich

underground ore from Lindsay's Reward

and the open-cut from Yuletide. This

should give a total recovery of up to

13,000 ounces to December 31st ....

(e) ...."

10. In our opinion there was nothing in the documents to which we have referred which would support the unqualified and confident assurance which Mr Collins gave at the meeting of 8 May 1985 and we are aware of no other material which would support such an assurance being given. The documents themselves exhibited a number of features which clearly called for caution on the part of a prudent financial adviser seeking to induce investment in such a venture as that being undertaken by Carbon Gold Pty Ltd; yet Mr Collins expressed himself, as the trial judge found, in unqualified terms. Even if the assessments of proven, probable and possible reserves as set out in those documents were accurate, the ability of Carbon Gold Pty Ltd to return the premium payments to the investors depended upon many other factors, including the mining operations proceeding as planned and being such as to generate sufficient surplus funds to enable repayment of at least $2.5m. by the end of October 1985. In this regard, there was evidence from which it could be concluded that there had, prior to 8 May 1985, been delays in reaching target dates in respect of a number of aspects of the company's activities. But, in any event, there were other factors of which Mr Collins must be taken to have been aware, which reinforced the need for a more cautious approach than that taken by him as to the likely timing of the return of the premium payments.

11. Mr Collins had become a director of Carbon Gold Pty Ltd on 16 April 1985, although it appears that his association with that company began a little earlier. Mr Collins became a director following the resignation from that company's board of Messrs Wheeler, and Grace and Mr R. Garton-Smith, the latter being the appellant's solicitor. Those directors had resigned from the board some eight days after they, together with Mr Pierucci, who did not resign from the board, had carried a series of resolutions put by Mr Garton-Smith, without notice to Mr Couche and the other directors, to a meeting of directors of Carbon Gold Pty Limited held on 3 April 1985. Those resolutions called for the cessation of any further work on mine development and plant construction until such time as an independent consultant had reviewed the geological information, mining programme and mining operations overall and reported that the venture was viable. The minutes of that meeting record that Messrs Wheeler, Grace and Pierucci informed the meeting that they had no true understanding of the position of Carbon Gold Pty Ltd and the progress on the Lindsay's Reward property and that, as the persons responsible for raising funds from investors, they wished to obtain an independent report on the company's activities to date and the likelihood of future profits if the company pursued its course of action to reopen the mine and process the ore using the company's own plant. A further resolution was passed that active fund raising activities cease forthwith. While the resolution that further work in mine development and plant construction should cease was reversed at a meeting held on the following day, the prohibition on the appellant raising further funds for the venture pending the furnishing of the report remained.

12. We cannot overlook the circumstance that the basis upon which the appellant was prepared to resume fund raising activities notwithstanding that the report by the independent expert had not been received does not appear from the evidence. It cannot, therefore, be assumed that the matters which prompted Messrs Wheeler, Grace, Pierucci and Garton-Smith to act as they did on 3 April 1985 had been resolved to their satisfaction. Yet resume its fund raising activities the appellant did, for it was in consequence of its doing so that the meeting of 8 May 1985 was arranged.

13. A further significant feature is that a finance sub-committee meeting was held on 22 April 1985 at which concern was expressed as to the projected cash flow deficits for the months of June and July 1985, and various ways of endeavouring to overcome the consequent difficulties for the company were discussed. It does not appear that those difficulties had been resolved by 8 May 1985.

14. Another matter of some significance is that at a meeting of the directors of Carbon Gold Pty Ltd held on 26 April 1985, a meeting attended by Mr Collins, all those present agreed that the speculative nature of the investment should continually be stressed to unit holders and prospective unit holders.

15. Taking these matters into account, we are unable to accept the submission that there was no evidence before the trial judge to support his conclusion that Mr Collins had no proper grounds upon which to justify the unqualified assurance which he gave that the premiums would be repaid within a very short time. Nor are we able to agree with the further submission put by counsel for the appellant that the trial judge failed to give proper weight to the evidence of Mr Couche. It is one thing to say, as Mr Couche did, that, on the material available to him, the special units provided an attractive and good investment which could yield substantial returns. It is quite another to say that that material supported the assurance which Mr Collins gave.

16. Counsel for the appellant further submitted that his Honour failed to take into account the evidence given by Mr Wright concerning the calculation which he made based upon the figures provided at the meeting on 8 May 1985. It was submitted that those calculations tended to support the feasibility of what Mr Collins was saying and that that circumstance demonstrated that there were reasonable grounds for Mr Collins' assertion. We do not think there is any substance in this submission, nor in the submission also advanced that, because Mr Wright tried to check the figures for himself, he could not have been influenced by what Mr Collins said.

17. In our opinion, none of the grounds of appeal has been established.

18. We turn to the cross-appeal. The dismissal by the trial judge of the claim by the respondents against Mr Collins occurred prior to the decision of the High Court in Hamilton v. Whitehead [1988] HCA 65; (1988) 63 ALJR 80. In the light of what the High Court there said, and having regard to the role which the trial judge found that Mr Collins played vis-a-vis the appellant in making the statements on which the respondents relied, the respondent's cross-appeal must succeed.

19. In the result, we would dismiss the appeal with costs, allow the cross-appeal with costs and vary the orders made on 22 April 1988 by inserting in orders 1 and 2 after the words "first respondent" the words "and the fifth respondent" and by deleting from order 3 the reference to the fifth respondent.

The appellant is a corporation carrying on business as a financial consultant and investment adviser. The appellant had an interest in a goldmining venture being developed in the Mt. Magnet goldfield by Carbon Gold Pty. Ltd. ("Carbon Gold"). Carbon Gold carried out its mining activities as trustee of a unit trust known as the Carbon Gold Unit Trust ("the Trust").

2. The three directors of the appellant, Wheeler, Grace and Pierucci, were three of the directors of Carbon Gold appointed upon its incorporation on 28 August 1984. At the time the Trust was formed, 5,500 units in the Trust were issued, denominated as 1 cent units. One thousand units were issued to the appellant or shareholders in the appellant. Carbon Gold instructed the appellant to employ its commercial skills to introduce investors to the Trust and agreed to pay the appellant a commission from the monies invested. Persons invited to invest in the Trust were asked to subscribe to special units. The special units were 1 cent units issued at a premium of $499.99. Carbon Gold sought to raise capital for the venture by the issue of special units. Investors in special units were advised that distributions to unit holders would be allocated in repayment of the premiums paid by special unit holders before any distributions were made to ordinary unit holders.

3. By 26 October 1984 $301,000 had been invested by subscription to special units. On 26 October 1984 the Board of Directors of Carbon Gold resolved that an underwriting agreement be prepared between Carbon Gold and the appellant pursuant to which the appellant would be paid a fee of 2-1/2 per cent to underwrite the balance of the finance necessary for the minimum subscription to be achieved, namely $199,000. On 5 December 1984, Pierucci reported to the Board of Carbon Gold that $826,000 had been subscribed to the Trust. It was resolved at that meeting that the amount to be subscribed to units of the Trust be limited to $1,250,000 with the right to accept over subscriptions up to the maximum level of $1,850,000 or such lesser amount as was received to midday on 19 December 1984.

4. By December 1984 Carbon Gold had acquired a mining tenement on which a former goldmine was situated and a proposition had been put to the Board to recommission the mine by using the capital that had been raised. It was anticipated that the mine could start operating in May 1985 and earn a monthly net profit of approximately $700,000 thereafter. It was proposed that further costs of development, anticipated to be $3m to $4m, would be raised from the issue of units to the public in July or August 1985.

5. At a meeting on 7 February 1985 the Board decided to raise additional funds for the acquisition of a further mining property.

6. In March 1985 a meeting of the Board of Carbon Gold was advised by Pierucci that further subscriptions to special units could raise further capital at the rate of $200,000 per month in the months of March, April and May. The Board agreed that the appellant be paid a commission of 6 per cent on any additional subscriptions raised by the appellant.

7. At the meeting of the Board of Carbon Gold held on 3 April 1985, the directors of the appellant and its solicitor, also a director of Carbon Gold, supported a motion that further work by Carbon Gold on mine development and plant construction cease until such time as an independent consultant had reported that the venture was viable. Wheeler stated that he, Grace and Pierucci were not familiar with goldmining ventures and were concerned with the Trust's financial position. The minutes recorded that Wheeler Grace and Pierucci indicated to the Board:

"that they had no true understanding of the present

position of the company (Carbon Gold) and the

progress on the Lindsays Reward property. As the

persons responsible for raising funds from

investors, they wanted to obtain an independent

report on the company's activities to date, and

the likelihood of future profits if the company

pursued its present course of action to reopen the

mine and process the ore using the company's own

plant."

8. The meeting resolved that an independent consultant be appointed to review the operation and report on the viability of the venture. It was also resolved that no further steps be taken to seek funds for the venture, but unsolicited subscriptions would be accepted and held.

9. On the following day another meeting of the Board of Carbon Gold was held at which neither Wheeler, Grace nor Pierucci nor the appellant's solicitor was present. That meeting resolved that the Board's earlier resolution to suspend mining operations be ignored. Such members of the Board as were present at that meeting were members who had opposed the resolutions put forward on the previous day.

10. At a meeting held on 11 April 1985, Wheeler and Grace resigned from the Board of Carbon Gold with effect from the following day. Pierucci remained on the Board. On the motion of Wheeler, four new directors were appointed, one of them being Collins, an employee of the appellant. The other three directors appointed were persons with substantial investments in the Trust.

11. At the meeting of the Board of Carbon Gold held on 16 April 1985, it was decided to establish a finance sub-committee of the Board. Pierucci was a member of that sub-committee; it met on 22 April 1985 and concern was expressed about the projected deficit expected to be incurred in the months of June and July. According to the minutes of that meeting produced in evidence, Pierucci stated that the appellant might maintain its requirement that a report be provided by a consultant geologist before the staff of the appellant would feel comfortable in seeking additional funds from potential investors. The minutes further recorded that Pierucci stated that, if geologists were prepared to address the senior management of the appellant and express confidence in the project, the appellant would raise the balance of funds sought to be obtained, namely $600,000.

12. The minutes of the meeting of the Board of Carbon Gold held on 26 April 1985 show that Pierucci and Collins agreed that the appellant would continue to seek funds from investors. The reason for that decision was based on cash flow projections. There was no indication that a consultant geologist had addressed the management of the appellant to express confidence in the project in accordance with the previous stipulation set by Pierucci. The minutes also recorded that the Board agreed that the "speculative nature of the investment should continually be stressed to Unit Holders and prospective Unit Holders".

13. By the end of April 1985 the mining activities had produced 13 ounces of gold from the reopened mine.

14. On 8 May 1985 the appellant convened a meeting at its premises for potential investors invited by the appellant to attend to receive details of a "gold investment opportunity". Some of the persons present were part of a group of friends and fellow members of a golf club. Collins was part of that group and so was the respondent, Colin Frederick Wright. Mr Wright and his son attended the meeting. They were met by Collins and taken into a room set up as a small theatre in which the investment proposal was presented. Two documents were circulated at the meeting, one being a memorandum dated 29 April 1985 headed "Background Information" and prepared by Guest, a director of Carbon Gold, and the other a circular to unit holders dated 6 May 1985 and signed by R.A. Couche as chairman of the Board of Carbon Gold.

15. The document, "Background Information", spoke of proven and probable reserves of $16m in the re-opened goldmine and possible reserves of $32m and stated that the mine would be fully operational within two weeks, extracting 1,250 tonnes of gold-bearing ore per month with an average gold content of approximately 24 grams per tonne. Although the document gave strong support to the worth of the venture, it did not specify any date by which premiums would be repaid to investors, although it confirmed that special unit holders would receive priority in distributions until the premiums had been repaid.

16. The circular to unit holders dated 6 May 1985 predicted the recovery of 13,000 ounces of gold from the mining venture by 31 December 1985. That document stated that special unit holders would receive all distributions until 31 December 1985, limited to $2.5m to secure the repayment of the premium of $499.99 on the 5,000 special units.

17. Collins supervised the conduct of the meeting and introduced the director, Guest, to speak to the potential investors. It was Wright's evidence that Guest spoke in optimistic terms advising those present that there was $32m worth of gold to be extracted and that production would be starting within two weeks. According to Wright, Collins spoke after Guest and after the meeting had been addressed by a geologist or engineer. It was Wright's evidence that Collins stated that the premium of $499.99 to be paid on the 1 cent units would be returned to investors in October 1985 and at that time each 1 cent unit would be exchanged for 1,000 50 cent shares in a newly floated company to be formed to take over the mining ventures. It was Wright's evidence that there was no qualification expressed by Collins as to the return of the premium and that Collins's words made Wright very confident that the investment involved no risk. There was no mention of any risk or problems with the venture in the course of Collins's address. The evidence from Wright's son was to the same effect, namely that the proposed investment was promoted as if it were a loan to the company free of risk.

18. Wright left the meeting with application forms for the allocation of units and with the conviction that any premium paid would be repaid in October. In addition to the application forms, Wright took with him the two documents distributed at the meeting. The following morning Mr and Mrs Wright each completed application forms for 10 units and on either that day or the day after Wright delivered the forms to Collins at the appellant's premises and paid the subscription price of $10,000.

19. By December 1985 the venture had failed. Only 100 ounces of gold had been produced. All but one of the directors of Carbon Gold resigned on 3 December 1985 and were replaced by others who conducted Carbon Gold for the purpose of realizing assets and winding up the Trust. As a result of that winding up the respondents received $289 and 200 shares and 40 options in a no liability company for each unit they had held in the Trust.

20. The respondents commenced proceedings against the appellant seeking damages for negligent advice and for contravention of s.52 of the Trade Practices Act 1974 ("the Act"). In addition, the respondents sought damages from Wheeler, Grace, Pierucci and Collins as persons who had aided and abetted, counselled or procured or had been knowingly concerned in the alleged contravention of s.52 of the Act by the appellant.

21. It was the respondents' case that four express representations were made by the appellant by oral statements made by Collins at the meeting conducted on the appellant's premises on 8 May 1985 and involved conduct that contravened s.52 of the Act. It was also alleged that two of those representations were stated in the circular to unit holders dated 6 May 1985 distributed at that meeting. It was alleged that the express representations were false.

22. At the conclusion of the respondents' case, the appellant made a submission that it had no case to answer and elected to call no evidence. The submission was rejected by the trial judge.

23. As to two of the express representations pleaded, the trial judge found that no foundation had been established for a finding that there had been a contravention of the provisions of s.52 of the Act, and those findings have not been challenged by the respondents.

24. The two remaining express representations pleaded against the appellant and Collins were as follows:

"Investors who were prepared to invest $500.00 per

unit in the Trust would receive a return of

$499.99 per unit by October 1985;

The Trust would be restructured and its assets so

revalued that 1,000 fully paid bonus units of 50

cents each in the restructured Trust would be

issued in respect of each special 1 cent unit held

in the Trust".

It was pleaded that those representations were false and in so far as they involved statements of advice, information or opinion, it was pleaded that they incorporated the following implied representations of existing fact:

(i) That Collins believed, or alternatively had

reason to believe, that each of the

statements were in fact accurate.

(ii) That Collins on behalf of the company had

made enquiries to establish that the said

statements were reliable and well informed.

(iii) That Collins knew of facts which justified

the making of the said statements.

(iv) That Collins had experience and expertise in

giving advice to persons who were interested

in investng in ventures of the type carried

on by the Carbon Gold Unit Trust.

(v) That the company by Collins was making the

said statements in circumstances in which

its servants or agents were exercising all

due care and diligence.

25. It was alleged that the implied representations of fact were also false and that the making of such representations was conduct in breach of s.52 of the Act in that it was misleading or deceptive or was likely to mislead or deceive.

26. The trial judge held that the evidence presented was convincing and uncontradicted and established that Collins had stated at the meeting of 8 May 1985 that investors in the special units would receive a return of $499.99 per unit by October 1985. His Honour also found that the representation in relation to restructuring had been made and had been propounded as a firm commitment apparently by an oral statement of Collins at the meeting and in the Carbon Gold circular to unit holders distributed at the meeting conducted by the appellant.

27. Having found both that express representations had been made and that each was predictive in nature, the trial judge then proceeded to look at the implied representations of fact alleged to arise therefrom. As to the representation in respect of the restructuring of the Trust, his Honour found that there had been no misleading or deceptive conduct involved in that representation. The representation duly reflected the intention of the Board of Carbon Gold and if Collins implied that he held that belief and knew of facts to justify the belief, those implied representations were also true.

28. The respondents did not challenge that finding.

29. His Honour then dealt with the remaining representation, namely that investors would receive a return of the premium they were to pay on the special units of the Trust by October 1985. His Honour found that the statement contained the following implied representations:

(i) that Collins believed that statement to be a

correct prognosis;

(ii) that he knew of facts which in an objective

sense would justify his belief;

(iii) that he was making the statement with due

care; and

(iv) that he was applying his own experience and

expertise.

30. Of these implied representations only the second was expressly found to be false.

31. The foundation for that finding by his Honour was that there had been no warrant for Collins to make a statement free of qualifications and no grounds or facts to justify the certainty of his assertion. His Honour found that the statement was inconsistent with the awareness of the Board of Carbon Gold as expressed in the resolution of the Board at the meeting of 26 April 1985 that the speculative nature of the investment had to be continually stressed to unit holders and prospective unit holders. His Honour found that such a statement by the Board, at a meeting at which Collins was present, suggested that the surrounding facts did not support an "unqualified promise" to repay premiums within a few months. His Honour found there was a representation to investors that they would receive such a return in the short term, being a representation so positively stated that it was in his Honour's words "a virtual guarantee".

32. Having found the implied representation to have been false, his Honour then found that it was a misrepresentation that amounted to misleading or deceptive conduct within the meaning of s.52 of the Act in that it inflated the degree of confidence that could be held by potential investors as to the future of Carbon Gold.

33. On that finding the appellant was found to be in breach of s.52 of the Act. His Honour then found that such conduct, in contravention of the Act, was causally connected to the respondents' decision to invest. His Honour found that the statement by Collins was a significant factor in the respondents' decision to invest and that the certain and unqualified nature of the representation overtook any reservation the respondents may have had as a result of the male respondent making his own calculations as to the prospect of repayment of the premium using the data contained in the documents distributed at the meeting.

34. Having found such a connection between the conduct of the appellant and the actions of the respondents, his Honour found that the respondents were entitled to relief under s.82 of the Act. His Honour considered it unnecessary to proceed to any finding on the pleading of negligence.

35. His Honour declined to find that Collins was a person knowingly concerned in the appellant's contravention of the Act and dismissed the respondents' claim against him. That finding was subject to a cross-appeal by the respondents and is dealt with later in these reasons.

36. In its appeal the appellant contended, firstly, that the trial judge erred in failing to find that the respondents bore an onus of proof which had not been discharged. It was submitted that the respondents had failed to prove that neither Collins nor the appellant believed that the premiums paid by the respondents would be repaid by October 1985 or alternatively to prove that there were no reasonable grounds for such a belief.

37. This may have been a case in which the question whether conduct which consisted of predictive or promissory statements, was misleading or deceptive could not be determined solely by reference to the state of belief, or grounds for belief, of the appellant or Collins.

38. In an appropriate case the non-performance or non-fulfilment of the prediction or promise may be argued to be the cardinal element of the misleading or deceptive conduct. (See Adelaide Petroleum NL v. Poseidon Limited, Unreported (Federal Court of Australia, French J, 7 October 1988) pp 9-10.)

39. The statement in Taco Company of Australia Inc. v. Taco Bell Pty. Ltd. [1982] FCA 136; (1982) 42 ALR 177 per Deane and Fitzgerald JJ. at p 202 that conduct may not be categorized as misleading or deceptive unless it conveys or contains a misrepresentation, was not intended to set limitations upon the interpretation of s.52 of the Act. As Bowen C.J. pointed out in Rhone-Poulenc Agrochimie SA v. UIM Chemical Services Pty. Ltd. (1986) 12 FCR 477 at p 489, the conduct complained of will usually only amount to conduct which is misleading or deceptive, if it contains or conveys, in all the circumstances of the case, a misrepresentation and in the same case Lockhart J. at p 504 stated that misleading or deceptive conduct under s.52 generally, although not always, consists of misrepresentations. In his judgment in Rhone-Poulenc which dissented in part from those of his brethren, Jackson J. also stated (at p 508) that it was not correct to treat sub-s.52(1) as applying only to cases where the conduct of the respondent could amount to misrepresentation under the general law. In Henjo Investments Pty. Ltd. v. Collins Marrickville Pty. Ltd. [1988] FCA 40; (1988) 79 ALR 83 at p 93, Lockhart J., with whose reasons Burchett and Foster JJ. expressed agreement in this respect, said the following:

"Misleading or deceptive conduct generally consists

of representations, whether express or by silence;

but it is erroneous to approach s.52 on the

assumption that its application is confined

exclusively to circumstances which constitute some

form of representation. The section is expressed

briefly, indeed tersely, in plain and simple words

which, if I may be forgiven for repeating them,

say simply: 'a corporation shall not, in trade or

commerce, engage in conduct that is misleading or

deceptive or is likely to mislead or deceive'.

There is no need or warrant to search for other

words to replace those used in this section

itself. Dictionaries, one's own knowledge of the

developing English language and ordinary

experience are useful touchstones, but ultimately

in each case it is necessary to examine the

conduct, whether representational in character or

not, and ask the question whether the impugned

conduct of its nature constitutes misleading or

deceptive conduct. This will often, but not

always, be the same question, as whether the

conduct is likely to mislead or deceive."

40. In respect of unfulfilled promises or predictions, there may be conduct which may be shown to be in contravention of s.52 of the Act without it being established that there was an implied representation by the maker of the prediction or promise that there were reasonable grounds for the belief that the prediction or promise would be fulfilled. Section 52 is directed at conduct of a corporation in trade or commerce as part of an Act concerned with the elimination of unfair trading practices which affect persons with whom a corporation may deal, or which may have an impact in trade or commerce that is regarded as adverse and undesirable. A positive unqualified prediction by a corporation may be misleading conduct in trade or commerce if relevant circumstances show the need for some qualification to be attached to that statement or the possibility of its non-fulfilment to be disclosed as a requirement of fair trading. The fact that the corporation believed or had reasonable grounds for belief that the prediction would be fulfilled, would not answer the question as to whether the conduct was misleading or deceptive conduct in trade or commerce. The misleading or deceptive conduct may be found in the failure to qualify the statement or disclose the risk of non-fulfilment and the event of non-fulfilment of a prediction or promise may be evidence that raises an inference that such a risk of non-performance existed or that qualification of the positive statement, prediction or promise was required. Each case will depend upon its own circumstances, but the assessment of misleading or deceptive conduct is an objective test not dependent upon the proof of an intent to mislead or deceive on the part of a corporation (see Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. [1982] HCA 44; (1982) 149 CLR 191) and restriction of the application of s.52 in respect of promissory or predictive statements by a corporation to conduct of the corporation which involves a lack of belief on the part of the corporation or absence of grounds upon which the corporation could form such a belief would be inconsistent with the thrust of the section.

41. In any event, the ground of appeal must fail because in truth the terms of the pleaded implied representations raised the same matters for proof as were recited in the ground of appeal and in respect of those matters the repondents bore the onus of proof. By his findings his Honour accepted that the respondents had discharged that onus. His Honour found that the evidence adduced by the respondents permitted an inference to be drawn that Collins made an implied representation that he knew of facts that, in an objective sense, would justify his belief and he further found that on the evidence there were no proper grounds to support that belief. There was no suggestion that his Honour regarded the onus as resting on other than the respondents and he was clearly satisfied that the respondents had presented sufficient evidence to discharge such onus as was upon them.

42. It is apparent that his Honour approached the case on the basis that the respondents could not succeed unless they were able to sustain by evidence their pleading that Collins and, by him the appellant, made implied representations that Collins believed his statement to be a correct prediction and knew of facts which, "in an objective sense", would justify his belief. His Honour concluded that on the material before him Collins may have believed that the premiums would be repaid as he had stated, but Collins had no proper grounds upon which he could justify such an unqualified statement. It was his Honour's very clear finding that the certainty with which the assertion had been made could not be justified by the facts.

43. The appellant further argued, however, that, irrespective of the belief held by Collins or grounds for belief known to him, the respondents had failed to prove that the appellant either did not believe or had no reasonable grounds to believe that the premium would be repaid by October 1985. This proposition misunderstands the operation of s.52 of the Act and probably does so in consequence of attempting to limit the operation of that section in respect of promissory or predictive statements to conduct which involves false, express or implied, representations. Although it was argued at the trial, it was not part of the appeal that his Honour could not find that Collins was conducting the meeting of 8 May 1985 on behalf of the appellant with the appellant's authority nor find that his statements at that meeting were made under the umbrella of that authority. The test of whether there had been a contravention of s.52 required an assessment of whether, in all the circumstances, the appellant had engaged in misleading conduct in trade or commerce. That was an objective assessment of the company's conduct. The conduct of the appellant was not made misleading because Collins made a statement which could not be supported by his limited knowledge of the facts. The appellant had engaged in misleading conduct because, according to an objective view of all the facts, it was a statement that should not have been made in the form it was. Once it was established that the conduct of Collins was part of the conduct of the appellant, the appellant's conduct had to be viewed objectively according to all the evidence adduced.

44. In their pleading the respondents alleged that the implied representations arising out of the express oral statements made by Collins on behalf of the appellant related to matters of belief and grounds for belief held by Collins. In so far as any pleading of implied representation was relevant, the appropriate pleading required an allegation that the appellant impliedly represented that it believed or had grounds to believe the statements made by Collins on its behalf. In the context of the whole of the statement of claim in which it was pleaded that Collins, at all material times, acted as an employee or agent of the appellant and made the pleaded statements on its behalf and in which the pleaded particulars of falsity of the implied representations were that the appellant did not believe, or had no reason to believe, that Collins's statements were accurate or knew of no sufficient facts to justify the making of such statements by Collins, it was clear that the pleading of the implied representations was to be understood as a pleading directed at the appellant.

45. It was not part of the appellant's case at the trial of the action that irrespective of Collins's belief, or grounds therefor, the appellant, through its directors, believed the statement to be accurate and knew of facts which, when viewed objectively, would justify the appellant's belief.

46. It appears to have been accepted that the knowledge of relevant facts possessed by Collins was the knowledge of the appellant if it were found, contrary to the appellant's denial, that Collins spoke for and on behalf of the company and with its authority.

47. With respect to that denial, his Honour found that the meeting of 8 May 1985 was a presentation of the appellant conducted by Collins on the appellant's premises pursuant to an intention of the appellant to continue to raise funds for Carbon Gold. The degree of responsibility extended to Collins by the appellant provided adequate foundation for a conclusion that at the meeting of 8 May 1985 the acts of Collins were the acts of the appellant. (See R. v. ICR Haulage Limited (1944) KB 551 at p 559; Tesco Supermarkets Ltd. v. Nattrass [1971] UKHL 1; (1972) AC 153 at pp 174-175; Welsh, The Criminal Liability of Corporations (1946) 62 LQR 345; Gower, Modern Company Law (4th Edition) p 207 et seq., cf. Universal Telecasters (Qld) Ltd. v. Guthrie (1978) 18 ALR 531.)

48. Furthermore, an assessment of the appellant's belief and grounds for belief restricted to an assessment of the belief and grounds for belief of Collins was a most favourable course for the trial to take from the point of view of the appellant. An assessment of the appellant's belief, and grounds for belief, in the certainty of Collins's statement assessed according to the knowledge and grounds for belief of the directors, Wheeler, Grace and Pierucci, could only have resulted in a more resolute conclusion by his Honour adverse to the appellant according to the material presented to him, particularly when the appellant elected not to adduce any evidence on the matter.

49. It follows that this ground of appeal must fail.

50. The appellant further contended that his Honour's decision was flawed in that he failed to pay proper regard to the evidence of Couche, a director of Carbon Gold.

51. Couche gave evidence of the beliefs and expectations he held as Chairman of Directors of Carbon Gold. He was an engineer by profession who had conducted his professional skills as an adviser and consultant; he had no experience as a financial manager of a mining operation. His evidence spoke of the optimism he held for the mining venture but also of equally strong reservations and qualifications in respect of the progress of the venture. The appellant did not refer to any part of his Honour's reasons that displayed a misunderstanding of any part of the evidence of Couche, the contents of which do not appear to have compelled a finding by his Honour either one way or the other on the respondents' case.

52. The appellant contended that due assessment of the evidence of Couche should have required his Honour to find that there was no evidence that Collins, and the appellant, did not hold a belief on reasonable grounds that the premium paid on each special unit would be repaid by October 1985.

53. I am unable to see that the evidence of Couche leads inexorably to that conclusion, but in any event it was not demonstrated that his Honour erred in any way in his treatment of it. If Couche's evidence were accepted without demur by his Honour, it could not have compelled his Honour to find that the appellant had not engaged in misleading or deceptive conduct by allowing Collins to seek the commitment of investments from persons who were told without qualification that the premiums paid in respect of such investments would be returned by October 1985.

54. On all the evidence it was open to his Honour to find, firstly, that an express statement had been made by Collins that the premium subscribed by investors would be returned within a short time as a matter of certainty and, secondly, that there was no factual basis to ground that assertion. It was a matter for his Honour to apply such weight, as he saw fit, to the evidence before him and to assess whether, in the light of that evidence, the appellant's conduct was conduct in contravention of s.52 of the Act. The effect of his Honour's finding was that the appellant had engaged in conduct that contravened the provisions of s.52 in that it had made an unqualified statement that premiums paid would be returned within a few months when an objective view of the facts disclosed that no such statement could be made without an appropriate qualification.

55. The appellant concentrated much of its argument upon the evidence of possible ore reserves and production prospects of the mining venture, but although these matters were relevant, they could not in themselves have provided the foundation for an unqualified assertion that invested funds would be returned within months. Such a statement required knowledge of matters that made fulfilment of the statement probable before it could be made so positively. In addition to the extent of ore reserves and production capacities of the venture, his Honour would have had regard to evidence showing that the venture was lagging well behind its projected level of operation and had experienced substantial cost overruns and that shortly before the meeting of 8 May 1985, a meeting of the Board of Directors of Carbon Gold had resolved that it must be emphasised to all prospective investors that their investment was speculative. Considering all these matters together, there was ample support for a finding by his Honour that there were inadequate facts to permit the appellant to make an unqualified statement to investors on 8 May 1985 that any investment would be virtually risk-free. Accordingly the appeal must fail.

56. The respondents submitted that in any event in respect of the alleged implied representations of the appellant the provisions of s.51A of the Act applied and it was argued by the respondents that the appellant had not discharged the onus imposed upon it by that section. The argument was not submitted to the trial judge.

57. Section 51A was inserted by the Trade Practices Act Amendment Act No. 17 of 1986 which came into operation on 1 June 1986. The application was commenced on 5 November 1986.

58. The respondents contended that the consequences of the amendment were procedural in nature only and, therefore, operated on the trial of any application heard after the commencement of the amendment.

59. The appellant contended that the introduction of s.51A had a substantive effect upon the rights of the parties to litigation under the Act and accordingly the provision should not be construed as having any retrospective effect. (See Foodland Associated Ltd. v. John Weeks Pty. Ltd. (1988) 80 ALR 709 at pp 710-711; MCP Muswellbrook Pty. Ltd. v. Deutsche Bank (Asia) AG (1980) 80 ALR 53 at pp 67-68.)

60. In view of the finding that the appeal cannot succeed, it is unnecessary to determine the question of construction of s.51A and its intended operation. However, as the matter has been argued, it is appropriate to make some comment upon it.

"51A(1) For the purposes of this Division, where a

corporation makes a representation with respect to

any future matter (including the doing of, or the

refusing to do, any act) and the corporation does

not have reasonable grounds for making the

representation, the representation shall be taken

to be misleading.

(2) For the purposes of the application of

sub-section (1) in relation to a proceeding

concerning a representation made by a corporation

with respect to any future matter, the corporation

shall, unless it adduces evidence to the contrary,

be deemed not to have had reasonable grounds for

making the representation.

(3) Sub-section (1) shall be deemed not to

limit by implication the meaning of a reference in

this Division to a misleading representation, a

representation that is misleading in a material

particular or conduct that is misleading or is

likely or liable to mislead."

62. Sub-section 51A(1) has the effect of either stating the law as it stood prior to the amendment or extending it. Sub-section 51A(3) makes it clear that the reference to a misleading representation is not to be taken to limit the meaning of misleading conduct. It is to be noted that sub-s.51A(1) is concerned only with representations and not with the broader concept of conduct. It, therefore, has direct relevance to s.53, for example, but indirect operation upon s.52. The sub-section provides that a representation with respect to any future matter "shall be taken to be misleading" if the corporation does not have reasonable grounds for making the representation. It does not deem such a representation to be misleading conduct. It provides that representations "shall be taken to be misleading" which indicates that there is a matter of judgment or decision remaining to be exercised as to the quality of the representation. (See Williams v. Town of Claremont (1975) WAR 125 at p 128.) If there has been any expansion of the scope of a corporation's liability under s.52 of the Act by sub-s.51A(1), the sub-section could not be presumed to be of retrospective effect.

63. In sub-s.51A(2) the draftsman has moved from the use of the expression "taken to be" to the use of the word "deemed" and has apparently used it with the meaning that a conclusion is compelled to be formed where in the ordinary course of events it may not be formed. In effect, the sub-section has placed an onus on a corporation to adduce evidence to discharge a statutory presumption that it did not have reasonable grounds for making a representation with respect to a future event.

64. The question then raised is whether a provision reversing the onus of proof or introducing a statutory presumption may be substantive in effect, notwithstanding that it is directed to a matter of procedure.

65. In Milicivic v. Campbell [1975] HCA 20; (1975) 132 CLR 307 it was considered that provisions relating to onus of proof were procedural in nature only (per Gibbs J. at p 316 and Mason J. at p 319) referring to similar statements in Orient Steam Navigation Co. Ltd. v. Gleeson [1931] HCA 2; (1931) 44 CLR 254 at pp 259-260, 262-263 and 264. Neither case was concerned with the retrospective effect of an interpretation of a statutory provision. In Ah Hing v. Hough (1926) WALR 95 at pp 98-99 and 103-104, which was a case concerned with the retrospective effect of statutory reversal of the onus of proof, the Full Court declined to hold that the provision under consideration was merely procedural and, therefore, retrospective in operation. However, in that case the amendments were described as drastic and having the practical effect of depriving an accused of a defence.

66. It may be noted that pursuant to s.79 penal consequences attach to contraventions of many of the provisions of Pt.V to which s.51A applies and in the absence of clear expression of a contrary intention perhaps sub-s.51A(2) should not be presumed to be of retrospective effect.

68. The respondents sought damages against Collins by relying upon s.75B of the Act which would make Collins liable under the Act as a person involved in a contravention of s.52 of the Act by the appellant, if he were a person, inter alia, knowingly concerned in that contravention.

69. His Honour found that Collins was not a person to whom s.75B of the Act applied and relied upon dicta of the High Court in Yorke v. Lucas [1985] HCA 65; (1984) 158 CLR 661 at p 671 to reach that finding.

70. His Honour perceived a difficulty in attaching liability to a natural person under s.75B of the Act where the whole of the conduct of the corporation attracting liability under s.52 of the Act was the conduct of that person. His Honour considered such conduct could not be accessorial conduct with which s.75B of the Act was concerned. It was his Honour's view that separate and distinct conduct on the part of Collins was required before s.75B of the Act could apply and impose liability on Collins as a person involved in the contravention of the Act by the appellant.

71. Of course his Honour did not have the benefit of the recent statement of the High Court in Hamilton v. Whitehead [1988] HCA 65; (1989) 63 ALJR 80 delivered on 7 December 1988. In Hamilton v. Whitehead the High Court, comprised of Mason C.J., Wilson and Toohey JJ., took the opportunity to clarify the remarks made by Mason A.C.J., Wilson, Deane and Dawson JJ. in Yorke v. Lucas and to explain the operation of Mallan v. Lee [1949] HCA 48; (1949) 80 CLR 198, the foundation for those remarks.

72. As the High Court stated in Hamilton v. Whitehead, in Mallan v. Lee the Court was concerned with the provisions of s.230 of the Income Tax Assessment Act 1936, which imposed direct liability upon a servant or agent of a company for knowingly and wilfully understating the amount of income of a company in a taxation return. The offence of the company as described in that section arose out of a vicarious responsibility for the act of its servant or agent. Being the principal offender, the servant or agent could not, at the same time, be an accessory to the vicarious offence of the company.

73. In Hamilton v. Whitehead s.169 of the Companies (Western Australia) Code was the source of the statutory offence and the terms of that section imposed direct liability upon the company for acts done by the company. The section did not make the company liable for acts performed by a servant of the company. In Hamilton v. Whitehead it was pointed out that the relevant provisions of the Trade Practices Act 1974 were like provisions to s.169 of the Companies (Western Australia) Code, but unlike the provisions of s.230 of the Income Tax Assessment Act 1936 as considered in Mallan v. Lee in that a direct liability was imposed on the company for acts done by persons who embodied the company. There was no imposition of vicarious liability upon the company for actions of servants or agents of that company.

74. In Yorke v. Lucas the Court had suggested that the principles of Mallan v. Lee may have application to s.75B of the Trade Practices Act 1974. In Hamilton v. Whitehead the High Court made this comment in respect of that reservation:

"It would seem to us, with respect, that this

reservation, made no doubt out of an abundance of

caution, was unnecessary. The provisions of the

Trade Practices Act, like the Code in the present

case but unlike s.230 of the Income Tax Assessment

Act, were such that the alleged accessory was

indeed a true accessory since the offence

committed by the company was not the consequence

of a vicarious liability for the actions of its

servants carried out on its behalf. It was the

consequence of actions undertaken directly by it,

that is to say by a person who was the embodiment

of the company." (p 83)

75. Hamilton v. Whitehead referred to the remarks of Lord Reid in Tesco Supermarkets Ltd. v. Nattrass (supra) in which he explained the difference between acts of persons for which a company incurred direct liability and acts of servants or agents of the company for which the company could only be statutorily or vicariously liable. As Lord Parker stated in Daimler Company v. Continental Tyre and Rubber Co. Ltd. (1916) 2 AC 307 at p 340, "the acts of a company's organs, its directors, managers, secretary, and so forth, functioning within the scope of their authority, are the company's acts...". (See Gower, Modern Company Law 4th Edition p 205 et seq.)

76. Furthermore, in sub-s.84(2) of the Act, it has been expressly provided that any conduct engaged in on behalf of a body corporate by a director, servant or agent within the scope of the person's actual or apparent authority or by any other person at the direction or with consent or agreement, express or implied, of a director, servant or agent, such direction, consent or agreement being within the scope of the actual or apparent authority of the director, servant or agent, is deemed for the purposes of the Act to have been engaged in also by the body corporate. Whether sub-s.84(2) extends the common law is immaterial. What it does do is make clear that such activities by directors or agents of the company will attract direct liability to the company under provisions such as s.52 of the Act and no question of vicarious liability will arise in that circumstance. (See Trade Practices Commission v. Tubemakers of Australia Ltd. [1983] FCA 93; (1983) 76 FLR 455 per Toohey J. at pp 474-476.

77. To determine whether a company has contravened the provisions of s.52 of the Act, it is necessary to determine firstly, whether the relevant acts have been carried out by persons who may be regarded as the company applying the principles set out in Tesco Supermarkets v. Nattrass as approved by the High Court in Hamilton v. Whitehead, or secondly, whether the conduct was within the apparent authority of a servant or agent of the company and, therefore, deemed to be conduct of the company applying the provisions of sub-s.84(2) of the Act.

78. Although it is unnecessary to consider the point in this case, the scope of sub-s.84(2) may raise the question to what extent the application of that sub-section will impose direct liability on a company for unauthorized, prohibited or malicious acts of an employee carried out in the course of his employment and within the scope of his apparent authority. Perhaps the limitation of such a liability may have to be found in the words "on behalf of a body corporate". (See Trade Practices Commission v. Tubemakers of Australia Ltd. at p 475.)

79. In Colonial Mutual Life Assurance Society Limited v. The Producers and Citizens Co-operative Assurance Company of Australia Limited [1931] HCA 53; (1931) 46 CLR 41 it was held that an agent employed by an insurer to make statements for the purpose of persuading the public to take policies of insurance with that insurer, spoke with the voice of the insurer and carried the insurer's authority to make those statements in pursuing that purpose and that the insurer must bear liability for conduct within the scope of that authority, notwithstanding that the insurer may have instructed the agent directly and forcefully not to do the specific acts that attracted liability. (Per Gavan Duffy C.J. and Starke J. at p 47 and Dixon J. at p 50.) The question of motive of an employee or agent may be relevant in determining whether the acts of the employee or agent were done for the company in the course of pursuing the purposes of employment or whether they were private acts done for the purpose of the agent or employee. (See Limpus v. London General Omnibus Co. [1862] EngR 839; (1862) 1 H & C 526.)

80. His Honour appears to have found the appellant to be in contravention of s.52 of the Act by applying the relevant common law principles. Sub-section 84(2) of the Act was not relied upon as the foundation of the finding.

81. His Honour found that the meeting to which potential investors were invited was a presentation of an investment proposition by the appellant on the appellant's premises. Pursuant to an agreement made between the appellant and Carbon Gold, the appellant, in return for a commission, sought to persuade investors to subscribe to special units in the Trust.

82. Although Collins was not a director of the appellant and ordinarily may not have been regarded as the voice of the appellant, he was an appointee of the appellant to the Board of Carbon Gold and was apparently instructed to conduct the meeting of 8 May 1985 on behalf of the appellant. His Honour found that Collins was acting in his capacity as an employee of the appellant at the meeting rather than as a director of Carbon Gold. He was clothed with sufficient apparent authority to appear to be acting for the appellant. The appellant did not seek to disturb any of those findings on this appeal.

83. Accordingly, it must follow that the appellant was directly liable for its acts through Collins for any contravention of s.52 and that Collins was a person on whom s.75B of the Act could impose accessorial liability.

84. Paragraph 75B(c) provides that a person involved in the contravention shall be read as a reference to a person who has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention. Paragraph 75B(c) has been interpreted to require a party to a contravention to be an intentional participant in the sense that he possesses knowledge of the essential elements of the contravention. (See Yorke v. Lucas [1985] HCA 65; (1985) 158 CLR 661 per Mason A.C.J., Wilson, Deane and Dawson JJ. at p 670 and per Brennan J. at p 677.)

85. The knowledge required is not knowledge or awareness that the conduct has the capacity to mislead nor knowledge that it may be a contravention of s.52 of the Act. What must be shown to be possessed is knowledge of the elements of a contravention. (See Giorgianni v. The Queen [1985] HCA 29; (1985) 156 CLR 473 at p 481.)

86. It is suggested by Brennan J. in Yorke v. Lucas (at p 677) that the requirement, under s.75B to show knowledge, or mens rea, on the part a person involved in a contravention, will require proof of more than that required to demonstrate a contravention of the Act by a corporation, in that in addition to showing that such a person had knowledge of the acts that constituted the contravention, it would be necessary to show knowledge of the circumstances that gave the conduct a misleading or deceptive character. It would not be necessary to show awareness of the import of those circumstances, but it would be necessary to show knowledge of the facts which gave the corporation's conduct its character.

87. According to his Honour's findings, the acts which constituted the contravention of s.52 were the appellant's statement to potential investors in the course of inviting such persons to invest in the special units of the Trust that such investors would receive a return of the premiums paid on their investment within a few months without informing those potential investors of any qualifications on the prospect of repayment of the premiums. Obviously Collins was fully aware of those elements being the person conducting the meeting on behalf of the appellant and the person who made the statement for the appellant without qualification.

88. His Honour further found that Collins was aware, prior to the meeting, that such a statement would require qualification because Collins had participated in a resolution of the Board of Directors of Carbon Gold on 26 April 1985 that the speculative nature of the investment should be continually stressed to prospective unit holders. It followed from that finding that Collins possessed knowledge of the circumstances that gave the conduct of the appellant a misleading character. It is immaterial whether Collins understood the import of those circumstances or held a positive belief as to the truth of the assertion he had made for the appellant.